Raising Finance to buy a Franchise
Raising Finance to buy a Franchise
People are usually able to borrow more to establish a franchised business than they would for a conventional start-up venture. All the banks recognise that franchising is usually a safer way to get into business and, for established and proven franchise systems, they are prepared to lend, subject to status, up to 70% of the start-up costs including working capital. For a new, or less established franchise, this figure is nearer to 50%, much the same as a conventional business. Usually it is easier to get funding for a British franchise Association member franchise as these franchises have been accredited on merit of good practise and franchisee performance.
Typically the borrowing will be taken as a fixed rate loan repayable over a term no longer than that of the franchise agreement. Variable rate loans are also available if you want to gamble on interest rates. Some of the borrowing could also be taken as an overdraft to provide an element of working capital. Certainly the VAT element of any franchise fee is normally funded by way of overdraft until it is refunded by HM Customs. If you go VAT registered as a franchise business you will soon get the VAT back anyway.
The types of lending discussed so far are normally arranged at local Business Centres and security for any borrowing may be required. Security is usually provided in the form of a second mortgage over property but could also include a charge over surplus cash, insurance policies or stocks and shares. If there is no security available the bank can look for a guarantee, up to 75% of the amount borrowed, from the Department of Trade and Industry’s Small Firms Loan Guarantee Scheme. The remainder is considered as unsecured borrowing. Your bank manager or local Business Link will be able to advise you how to apply for this if required.
Where it is an automotive franchise vehicles or equipment are required for the franchise these can be financed under a lease or hire purchase agreement. Some franchisors will have facilities in place with known companies assisting with this type of finance, such as Lombard Business Finance. The rates on any lending can vary depending on the contribution, security and track record of individuals. Examples of Atomotive franchises can be found at www.selectyourfranchise.com/uk/franchise-directory/Automotive-Franchise.html - 20k -
Raising Finance to buy a Franchise - To learn more about this author, visit Nick Strong's Website.
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Raising finance for a franchise is not as daunting as it may seem. Most of the main banks have a dedicated franchise sections that are only too happy to provide finance for the purchase of a franchise, although it should be noted that it is mainly the individuals that they assess, rather than the franchise. The banks are however very interested to see how franchisee's accounts perform and have their own internal records that outline the success levels of many franchise businesses.
People are usually able to borrow more to establish a franchised business than they would for a conventional start-up venture. All the banks recognise that franchising is usually a safer way to get into business and, for established and proven franchise systems, they are prepared to lend, subject to status, up to 70% of the start-up costs including working capital. For a new, or less established franchise, this figure is nearer to 50%, much the same as a conventional business. Usually it is easier to get funding for a British franchise Association member franchise as these franchises have been accredited on merit of good practise and franchisee performance.
Typically the borrowing will be taken as a fixed rate loan repayable over a term no longer than that of the franchise agreement. Variable rate loans are also available if you want to gamble on interest rates. Some of the borrowing could also be taken as an overdraft to provide an element of working capital. Certainly the VAT element of any franchise fee is normally funded by way of overdraft until it is refunded by HM Customs. If you go VAT registered as a franchise business you will soon get the VAT back anyway.
The types of lending discussed so far are normally arranged at local Business Centres and security for any borrowing may be required. Security is usually provided in the form of a second mortgage over property but could also include a charge over surplus cash, insurance policies or stocks and shares. If there is no security available the bank can look for a guarantee, up to 75% of the amount borrowed, from the Department of Trade and Industry’s Small Firms Loan Guarantee Scheme. The remainder is considered as unsecured borrowing. Your bank manager or local Business Link will be able to advise you how to apply for this if required.
Where it is an automotive franchise vehicles or equipment are required for the franchise these can be financed under a lease or hire purchase agreement. Some franchisors will have facilities in place with known companies assisting with this type of finance, such as Lombard Business Finance. The rates on any lending can vary depending on the contribution, security and track record of individuals. Examples of Atomotive franchises can be found at www.selectyourfranchise.com/uk/franchise-directory/Automotive-Franchise.html - 20k -
Raising Finance to buy a Franchise - To learn more about this author, visit Nick Strong's Website.
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For an online Car Loan Calculator and finance for a cheap car loan. Get approved on car loans or car finance in Australia with cheap bank car loans and finding a car finance broker. Commercial car loans including business car finance and car lease. Car Loan Calculator has information on finance companies and getting the right cheap car loan from banks at best car loan rates and a online car loan calculator for all finance in Australia. Get the best car finance with our help at Car Loan Calculator and Finance Ezi. - Visit Richard Jefferies's Website |
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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 Nick Strong (Visit Nick's Website) Nick Strong launched www.se lectyourfranchise.com in October 2002. The site is now an industry leader and advertises over 450 franchise brands in the UK, USA and Canada. Nick has over ten years of experience in domestic and overseas franchise development. Nick is the Managing Director of Select Your Franchise UK Ltd, The Franchise Supplier Showcase and FranWeb Ltd. Company websites are www.S electYourFranchise.com, www.F ranchiseSuppliers.co.uk and www.FranWeb.co. uk. Nick also specialises in franchisee recruitment and business development training. To find out more about the services Nick and his team can offer you please go to www.selectyourfranchise.com/ contact.html
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